Intro to S

Julia Bialetska 0:01

So it could be used . Definitely the use case could be for food , for pharmaceutics , for electronics , for decor , for furniture , for fashion items , basically anything that needs protection . And we understand that . Probably we started with a higher end market because it was easier to enter that market with a higher price that we had . But of course we are looking into bigger impact and we understand that this comes with a proper price .

Ryan Grant Little 0:29

Welcome to another Climate Tech Podcast interviews with the people trying to save us from ourselves . Julia Bialacka is on a mission to overhaul the packaging industry with materials that don't pollute the earth . With her company , S . Lab , she's developed a packaging material that upcycles agricultural byproducts and seals them with mycelium , so not a molecule of the stuff is artificial . We talked about who it's for , what its reception has been and what the roadmap ahead looks like . I reached Julia in Barcelona . I'm Ryan Grant Little . Thanks for being here , julia . Welcome to the podcast .

Julia Bialetska 1:05

Hi Ryan , Thank you very much . Happy to be here .

Ryan Grant Little 1:07

You are the founder of S . Lab , which is a sustainable packaging company . You started at end of 2021 . What problem are you solving ?

Julia Bialetska 1:16

Yeah . So you kind of already said it that we are solving the problem of the packaging and , specifically , packaging being sustainable , eco-friendly , environmentally friendly , and there are two kind of parts into that . So first , the packaging has to be environmentally friendly . It has to be safe , it has to be returned to the nature , but at the same time , customers do not want to sacrifice the features of the current packaging materials that they use because of the convenience , because of the properties , because of the strengths and so on . So in our case , we were able to get to both of us . Our packaging is both strong , reliable , durable , water resistant , fire resistant , but at the same time you can throw it into the soil and it biodegrades in just 30 days .

Ryan Grant Little 1:59

And when you talk about returning it to nature , throwing it into the soil , so does this mean it should be composted and then that's how it returns to soil ? What happens if it goes into kind of the regular waste stream ? Does it break down just as easily then ?

Julia Bialetska 2:11

yeah . So ideal situation is , of course , if you throw it into the soil , because there are bacterias if I talk in a very simple terms that will biodegrade and compost this material so it is home compostable . So if you have a garden , are safe to throw it there . But also if it goes into a normal stream of the trash that we know that most of the countries do not , you know , have separate streams for different trash . So our packaging , if it goes into any trash or any channel or any normal trash , it will actually get into landfill at the end anyway , where it will naturally break and biodegrade , so it doesn't really have to have some proper conditions in order to biodegrade . So this is like also one of the biggest benefits , that you don't have to think about how to recycle it in the end .

Ryan Grant Little 2:57

Yeah , that's great , Because I know , especially with like first generation

The Problem with Traditional Packaging

Ryan Grant Little 3:00

of biodegradable bags and these kinds of things , the dirty little secret with that was that it's only biodegradable if it's put in the organic trash and stuff like that . Otherwise it causes possibly sometimes even more problems .

Julia Bialetska 3:12

And it might be even worse . So those first plastic bags they actually biodegrade to microplastics as well . So they did have some synthetics in that . So this was also the big problem that we wanted to solve . So we don't have any other components other than plant waste and mycelium it is network of mushroom roots and we do not use any other components , any chemicals , any synthetics or anything like that , because then it messes up the final kind of biodegradation process .

Ryan Grant Little 3:40

Let's zoom out a little bit on the packaging industry itself . I'd be curious to just hear I mean , it's obviously massive globally , but how big is it ? Who are the players ? What kind of innovations have there been over the past several , say decades ?

Julia Bialetska 3:54

Yeah , so I don't think I will surprise you , but I will say that the size of the packaging market is 1 trillion euros per year , so it is one of the biggest markets in the world . And we do understand that . You use packaging everywhere and this is just such a common thing that we are so used to packaging that probably you don't even see that or mention that . But what I think was a big changer was the COVID times , because everyone started to order online and all of that was coming to the packaging and this packaging was piling up in your own home . So that's when I think we started to realize like this is the really the big problem , but like there are good news actually that sustainable packaging is the most rapidly growing segment in this market . Right now it is worth 300 billion euros per year and it keeps growing from 9% to 15% every year . The demand is even bigger and we are not even close to meet the needs of the customers .

Julia Bialetska 4:53

So we did have conversations with big companies who are literally saying we are desperately looking for sustainable packaging solutions . Everyone is talking about that . So this is the key question in this industry to solve sustainability of the material , and I mean , if you go into any speech , into any workshop of the ceo or owner of the big company , question number one that they get asked is what about your packaging ? Once I was at the speech of owner of the supermarket chain in Netherlands and she was literally asked about the cucumbers in the plastics . So , like this is the key question .

Julia Bialetska 5:30

So I would say that , of course , the key players are all plastics polystyrene . There are many companies you know Tetra Pak very well that is doing those bags for milk and so on . I would say there are several players like that and all of them also like those packaging players , are looking into how they can expand their portfolio with any sustainable solutions , because that's what everyone is asking from them . Their customers are asking about that . And , again , there are many startups that emerge because of the situation that is happening and I do believe that we have space for so much , much more solutions , but I do see startups using waste or recycling or you know , basically anything that could help with this situation . And there are so many smart solutions and I think the big thing is right now is actually implementing those solutions and corporations , legislation , entities , startups to work together and actually to bring those smart and cool solutions into the life .

Ryan Grant Little 6:31

As investors , we love that kind of sweet spot of both a really , really big market but also one that's growing in the double digits . So that's nice to hear and , dare I ask , I mean a trillion euro industry , most of it still . You know , plastic and single use . What is the environmental impact of packaging globally ?

Julia Bialetska 6:48

I mean , it is even scary to start . And since we mainly focus on substituting the polystyrene or foam plastic you know this like white fluffy material that when you open the TV set , let's say it has this corner protectors or this type of a protective packaging . So this is the substitute , our packaging is a substitute of that . So of course we mainly focus on that . And there are 15 billion kilograms of polystyrene produced every year in the packaging industry and one kilogram of polystyrene leads to seven kilograms of CO2 emissions , to 12 liters of water usage .

Julia Bialetska 7:25

And then the big part is that 30% of worldwide landfills are covered with polystyrene . It is not recyclable , it is not reusable , so every single unit that basically was ever produced out of polystyrene still remains somewhere in landfills and then it pollutes soils , oceans , animals , our bodies . So this is a very , I would say , horrible situation with polystyrene specifically . And basically we are trying to solve this with our solution . And if you multiply 15 billion kilograms of polystyrene into 7 kilograms of CO2 emissions that it produces so it is more than 200 billion kilograms of CO2 emissions every year Then with water usage it's also around that number . So you can see that this is quite big , I would say .

Ryan Grant Little 8:12

I think some people will be shocked to hear that polystyrene is not recyclable and that indeed it's nasty , nasty stuff . You just mentioned kind of replacing things like the corner protectors in TV boxes . I've seen your product being used in perfume boxes and that type of thing . These are sort of the kind of higher-end packaging applications . Will it also make sense for lower-value use cases like takeout food containers ?

Julia Bialetska 8:37

So , of course , we are looking towards making sure that price is not an issue , or that we can match the price with a polystyrene , and I would say that even now with match the price with a polystyrene , and I would say that even now with a custom designed polystyrene , we are probably 20 from 20 to 40% more expensive than polystyrene , which is quite good already , because many companies are actually ready to pay this 20-40% premium for the packaging .

Julia Bialetska 9:01

That is much better , because polystyrene also has some additional costs that we need to take into consideration , like molding or injection tools that you have to buy before you can start producing . But I think with food , what I would like to address is a bit different . Not the issue , but the challenge that we need to work on is that we need to go through certification in order to be able to work with food , because it is like a close contact , which kind of makes it very awkward that plastics is allowed to have a contact with food , when , in order to get your natural material be in contact with food , you have to go through very precise and complex certification . So it could be used . Definitely , the use case could be for food , for pharmaceutics , for electronics , for decor , for furniture , for fashion items , basically anything that needs protection . And we understand that probably we started with a higher-end market because it was easier to enter that market with a higher price that we had . But of course we are looking into bigger impact and we understand that this comes with a proper price .

Ryan Grant Little 10:04

So plastics , which we know is dangerous for a food contact and can leach into our food , is approved . But things like mycelium and agricultural products , which are food , might not necessarily make the cut , and so your product is made out of mycelium and agricultural byproducts . And I wonder if you could talk about the many steps along the way of getting that kind of recipe landing on that combination of two inputs . Did you try some other materials as well ? What did the final recipe look like ?

Julia Bialetska 10:37

Yeah , so it was actually me and Michael Fonder who are working on this kind of recipe , and I have a master's degree in biotechnology . But I actually worked in a very different field . I was managing teams in the software industry . But we just really wanted to make a change and do something differently and we discovered that in order to create a new material , you need to have two components one that gives structure or kind of serves as a matrix for the material , and then the other component has to glue it all together or bind it all together . So if you have those two components , then you can create any new material . It was kind of a revelation for us that it seems easy just two components , we will find the perfect two components and do that , and maybe we were a bit naive about that , but I think that's what helped us at the end . So we thought , okay , let's look into those two components and try to find the best ones who could work together , and then at the end we could receive something like bioplastics or something similar to that .

Julia Bialetska 11:36

And then my co-founder discovered hemp . That is a very strong organic plant and the strongest probably out of other plants , and he said let's do our tests with hemp , since it is strong . And then also we found that there are some patents from Ford from a hundred years ago that was also trying to do some bioplastics using hemp . So that was our first step and we kind of thought well , this would be our first component , let's try it out . And we started to glue it with glues that we could find on the market , and all of those glues were synthetic . So by mixing organic or plant with synthetic glue we were receiving the same result as anyone else . It was still the polymerization reaction , and polymerization reaction is not reversible . So basically you cannot just throw it and it will not biodegrade into the same two components glue and hemp . So that's when we decided well , now let's look into the better solution for the gluing component .

Julia Bialetska 12:38

And by this kind of research and just looking into what's there in the world , we found mycelium . And mycelium does have this gluing or binding features , like for maybe for listeners mycelium is a network of mushroom roots , so like a very diverse network , and once it is mixed with something , it starts to create nets and really binds everything together . And when we discovered that mycelium could be our option , of course there were some other companies doing or working with mycelium . There were some interesting designers who were doing art objects with mycelium and we decided to go to the Botanical Institute in Kyiv to kind of ask them if they know about the mycelium .

Julia Bialetska 13:18

And we decided to go to the Botanical Institute in Kiev to kind of ask them if they know about the mycelium , about the features of the mycelium and the scientists . What was interesting enough , they didn't know about these features , but of course they never tried to make any product out of it . So they grew this first parent culture of mycelium for us , made a short training for us how to work with that , and basically that's when all started . We created a few samples and then brought this to our potential customers .

Ryan Grant Little 13:46

I'm currently reading the book Entangled Life by Merlin Sheldrake , which is , like all things , mycelium , and I mean it sounds kind of boring but it's so fascinating . And I mean , you know I could talk for hours about all the different interesting facts that I've learned so far . But one is that mycelium is genetically closer to people than it is to plants , which is just fascinating . And you can run tests , like you know , to figure out the fastest routes for city blocks or subway systems and stuff like that , by using these like mold tests and this type of thing . So I mean , just you know I'm about a third of the way through . So my mind is being blown still every day that I pick it up .

Julia Bialetska 14:27

I guess you probably already read in that book that Japanese subway system was built with a mycelium kind of approach . They took a map , planted mycelium and then , when it was spreading their nets , it's nets . That's how they actually build the metro stations in Tokyo .

Ryan Grant Little 14:42

Yeah , that's mentioned in the book .

Julia Bialetska 14:44

And .

Ryan Grant Little 14:44

I mean it's just , it's literally just . I mean no , it's not literally , it's figuratively . Mind blowing , really interesting stuff . What about the product performance ? So how does this stack up , you know , for your customers , compared to plastic or some of the other kind of non-circular packaging options ?

Julia Bialetska 15:01

Yeah . So as I mentioned in the beginning that we were trying really hard to make sure that the properties are the same as what our customers are used to . So first of all , our material is very durable . So of course there is a big concern in the circular materials the shelf life . So most or many of the materials they digrete , biodegrade before you even start them in the storage . So basically we wanted to match properties of the polystyrene so it is durable , it can just stay on the shelf for several years , Then it is waterproof at the same level as polystyrene , so exactly the same numbers . And then it is thermally insulating also at the same level as polystyrene , so like exactly the same numbers . And then it is thermally insulating also at the same level as polystyrene . But also on top of that we have a higher resistance , it is not deflameable compared to polystyrene . So it makes it safer even from that side to use our material . And also we are able to make it two , three times stronger than poly polystyrene .

Ryan Grant Little 16:01

So there's also like superior protective features of the material and aesthetically , can you mimic some of the stuff that people are doing with plastics with , like including dyes and stuff like that , or does it still have kind of the ?

Julia Bialetska 16:09

some of the pictures I saw looked more kind of natural color right now yeah , I would say that this kind of natural color is our blessing and our curse , because many customers prefer this natural look , because it helps them to show that their product is so naturally , so organic . And this is the packaging , that kind of wraps , the whole idea . Most of the customers , of our customers , are used to more shiny and like smooth and and color that is like more , you know , into one color , not several colors , not several shades of the color , so we can color material on top of it . And this is one of the top questions that we get from our customers can you color that ? But interestingly enough that I would say 80 , 90%

Innovations in Sustainable Packaging

Julia Bialetska 17:00

of our customers still stay with this natural appearance and natural color of the product , so they don't go to that route of coloring that at the end .

Ryan Grant Little 17:07

From everything I read about Instagram trends right now , anyway , beige is in beige core or whatever , so maybe you're accidentally on trend right now , but I wonder also if you're having any trouble with the on the messaging side of things . So , if I look back to when I worked in the biogas space , we really had to shift people's perspectives away from seeing like organic byproducts as like waste , because for us it's a , an input , it's something that's really valuable , right , because we're creating things out of it . And I wonder , you know , with mycelium maybe it's easier . But , like you know , if you're talking about agricultural waste and depending on what that kind of stuff is , is there any hesitancy from like putting that , you know , packaging high end perfume in something that is talked about as a waste ?

Julia Bialetska 18:46

Yeah , I mean you said that probably with my team it's easier . But there are still many people who are kind of scared of mushrooms and I get the question about spores all the time oh interesting , yeah .

Ryan Grant Little 18:56

Or people who've seen the last of us and uh are worried that it's going to like oh yeah this game and this movie .

Julia Bialetska 19:02

They kind of yeah , yeah made everyone I mean not everyone , but yeah , it made it worse .

Ryan Grant Little 19:08

Did it actually ? I mean , did that actually ? Yeah , I think so .

Julia Bialetska 19:12

I think so Because like you know , I think the movie has this like kind of scenes where you can see how mushrooms kind of grow into the human's body . So of course you know kind of it sticks with you . So we do get the question , but of course when we are able to explain that you know this is not something like an ammonia .

Ryan Grant Little 19:29

Your perfume packaging is not . Your tv box is not going to eat you , exactly yeah there are no spores at all .

Julia Bialetska 19:35

So in terms of agricultural waste , I think right now the perception is different , that everyone is trying to see how we can make a better usage of any type of waste , and I do see that there are so many associations who work really specifically on the waste , how we can reuse it , how we can put into the second kind of life . So I think with the waste it's more of already trend that is set that let's use waste and make a better usage or give it second life , and then we just have to explain that , you know , mycelium is nothing else , just the binder here and it is not alive and will not grow mushrooms out of the you know packaging or anything like that , because we do take into consideration all of this in our process .

Ryan Grant Little 20:22

And so customers are more and more demanding this stuff , presumably also on the regulatory side , you know , at least here in Europe you have I don't know which body it is that's responsible for this , but , like the European Parliament , council , commission , whoever it is that's putting these kinds of like regulations out they're definitely serious about packaging , circularity , waste , and there are all kinds of different plans for next year and for 2030 and for all these kinds of things to make stuff more sustainable , 2030 and for all these kinds of things to make stuff more sustainable . And I wonder to what extent these regulatory tailwinds help you and how closely you're kind of tying your business strategy to that type of thing .

Julia Bialetska 20:59

Yeah , actually it's a key for us . Those regulations , that's what helps us to promote what we do , and we see that customers actually understand the need that , because they are forced by those regulations and maybe this is not the best motivation for them to try to search for new solutions because of the regulations , but I mean , if it makes the world a better place , it doesn't really matter . So in EU there are very strong regulations . They all start with EU Green Deal . It has a very ambitious goals to make Europe a sustainable or climate-natural continent , and then thus there are many policies that have been implemented . There are directives , and there is a specific directive for the packaging that all of it has to be recyclable or reusable by 2030 .

Julia Bialetska 21:45

And I mean every big company that I spoke with , this is their question number one , or this is the problem number one that they are working on , because they understand that it's not much time left in order to convert to something different and they have to start right now because they produce in big amounts and they have loads of packaging .

Julia Bialetska 22:03

So there are loads of packaging that they have to replace and normally there are several types of the packaging , so they have to look into different solutions and I think this is what actually created a whole new approach in the ecosystem those companies . They are scouting or sourcing startups and they are actively collaborating with those . So I think this creates for startups like us . Those creates opportunity to work with a big company and to work towards implementing new material together . And maybe this is not something very new , because when plastic appeared like 100 years ago and then it started to be used as a packaging 50 years ago , it also took some time to actually make it work for the packaging industry and in terms of colors , shapes , forms and so on and so on . So this is something that we are . I would say we are in the same cycle of making sure that the new materials work in the packaging or in whatever industry , the same as it was done with plastics several years ago .

Ryan Grant Little 23:02

Yeah , things like packaging , where there is massive supply chain and kind of manufacturing involved . Five years is a minute right In terms of the amount of time that is required to get things moving , so I can imagine that there's a sense of urgency now , which is great . In fact , s-lab is a Ukrainian company . You were founded a few months before the full-scale invasion in February 2022 . And I know that people are always surprised to find out that there is like a really booming startup scene in Ukraine during this period . I was in Kiev seven times last year , so it's not a surprise to me , and I host an event called Invest in Bravery which showcases these startups , and you know the IT space has grown by 30% last year . So I wonder if you want to just talk a little bit about the situation as a Ukrainian founder of you know what that looks like and maybe open some eyes about what's happening in the startup scene there .

Julia Bialetska 24:00

Yeah , for sure . So , first of all , I would say that Ukrainian startups and Ukrainian startup ecosystem was always amazing . We always had great solutions and there are some huge startups that are not startups anymore , that are Ukrainian , and everyone heard about them . I would say Grammarly , magpo , gitlab . So these are Ukrainian startups who came initially from Ukraine and this shows how it was actually already developed .

Julia Bialetska 24:22

But I think before the war , we didn't get much attention towards Ukrainian startups and , again , this is for a very bad cause . But finally , ukrainian startups are getting the attention that they always deserved . So what happened after February 2022 , everyone was trying to support Ukraine as they could and startup ecosystem the worldwide I mean started to help from their side as they could . They were trying to bring or to give those Ukrainian startups visibility so they could go into new markets , they could sell into new markets , and we've been part of several conferences where we were brought as Ukrainian delegation of Ukrainian startups and this also helped us to showcase our solution , to find new investors and to get into our customers . So I would say what's happening ? That finally Ukrainian startups are getting this attention that they always deserved and , as you already said that the IT services they grow 30% , and that's how it's always been in Ukraine that we have very talented people . We have talented engineers , designers and this just kind of now helping us to show what we are capable of .

Julia Bialetska 25:30

And , of course , when you think about Ukrainian startups right now , the first thing that you think of is resilience how resilient you are being in the war country , being in the active war , with everyday shelling , still building something that is worth worldwide attention and getting new customers , attracting investors . So I think , actually , startup ecosystem is one of the most rapidly growing right now in Ukraine , and the big part of that is also that there is a totally new area the defense tech , or military tech and there are many solutions built on that . Of course , I believe that Ukraine is becoming , or already became , the leader in the defense tech solutions right now , and this is something that we also could continue and , of course , as much as we wish that we wouldn't need any defense tech or any military tech in the future . But also I see that many of those projects have doubled and you can use them also for humanitarian causes . So this is something that also could be used in the future , not only for military issues , but for any humanitarian issues .

Ryan Grant Little 26:36

Yeah , this so-called dual-use technologies and positioning a lot of it I mean the same things that are being used right now to repel invaders can also be used to understand the health of crops and that type of thing . So a lot happening there with the kind of autonomous technologies and , yeah , this , of course , mission driven is given a new sense in Ukraine right now . I wonder what S-Lab needs right now to drive its mission forward . Are you fundraising ? Are you hiring ? Are you looking for suppliers ? Customers ? Probably you're always looking for . Every startup is always looking for customers . But how can listeners help further S-Lab's goals ?

Julia Bialetska 27:12

Yes , so basically all of that , all of that , what you mentioned in 2023 . We closed our first pre-seed round . That was 700,000 euros . This was like private investment . So far , we raised around a million , like both private investment and public grants , and we are starting our new seed round that is 2.5 million euros . So we are basically starting to fundraise on that side , and I say that fundraising is always on . It doesn't matter if you are in an active round or just looking into building your startup . So that's one part of that .

Julia Bialetska 27:46

And , yeah , as you said , of course customers is always something that startup should be looking for , and we just returned from Consumer Electronics Show in the United States .

Julia Bialetska 27:56

So this is one of our target markets in terms of industry and in terms of location .

Julia Bialetska 28:00

Of course , maybe regulations in the US are not the best at the moment towards sustainability , but still there are companies who are willing to go that route and to try out the new packaging , new solutions . So , of course , we have a quite good pipeline right now that we are working with . So I'm proud to say that our pipeline is around 20 million euros of monthly revenue at the moment . So our key goal is to actually build our facilities to be able to produce as much as needed . So yeah , of course , hiring engineers , talented engineers , automation engineers this is something that we are looking for . So yeah , and for the suppliers , I would say that raw material that we use is agricultural waste , because material , basically , we cultivate it in our own laboratory and we are looking into local providers of the raw material Right now , since we produce in Spain . We do have our supplier in Spain , but we also look into other countries right now , and , of course , france , germany in Europe , and then maybe Canada and US in North America .

Ryan Grant Little 29:02

Please send me your investor deck and terms as well by email , julia . Thank you so much . This is fascinating what you're doing . Thanks for joining me today . Thank you very much , ryan , and thank you so much .

Julia Bialetska 29:10

This is fascinating what you're doing . Thanks for joining me today . Thank you very much , ryan , and thank you for listening .

Ryan Grant Little 29:12

Thanks for listening to another Climate Tech podcast . It would mean a lot if you would subscribe , rate and share this podcast . Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom . Find me , ryan Grant Little , on LinkedIn . I'll be back with another episode next week . Bye for now .